Madere’s Way: Japan leads world in sovereign bond crisis
Posted by Chuck Madere in Madere's Way on February 8th, 2010
Global Bear Rally Will Deflate
As Japan Leads World In
Sovereign Bond Crisis

- Image via Wikipedia

- Image via Wikipedia
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Milton Keynes will be vindicated.
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Lord Keynes will lose some of his new-found gloss.
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The Krugman doctrine that we should all spend our way back to health by pushing deficits to the brink of a debt spiral – or beyond the brink – will be seen as dangerous.
By Ambrose Evans-Pritchard, International Business Editor
Published: 6:15AM GMT 04 Jan 2010
Comments 95 | Comment on this article
The contraction of M3 money in the US and Europe over the last six months will slowly puncture economic recovery as 2010 unfolds, with the time-honoured lag of a year or so. Ben Bernanke will be caught off guard, just as he was in mid-2008 when the Fed drove straight through a red warning light with talk of imminent rate rises – the final error that triggered the implosion of Lehman, AIG, and the Western banking system.
As the great bear rally of 2009 runs into the greater Chinese Wall of excess global capacity, it will become clear that we are in the grip of a 21st Century Depression – more akin to Japan’s Lost Decade than the 1840s or 1930s, but nothing like the normal cycles of the post-War era. The surplus regions (China, Japan, Germania, Gulf ) have not increased demand enough to compensate for belt-tightening in the deficit bloc (Anglo-sphere, Club Med, East Europe), and fiscal adrenalin is already fading in Europe. The vast East-West imbalances that caused the credit crisis are no better a year later, and perhaps worse. Household debt as a share of GDP sits near record levels in two-fifths of the world economy. Our long purge has barely begun. That is the elephant in the global tent.
We will be reminded too that the West’s fiscal blitz – while vital to halt a self-feeding crash last year – has merely shifted the debt burden onto sovereign shoulders, where it may do more harm in the end if handled with the sort of insouciance now on display in Britain.
Yields on AAA German, French, US, and Canadian bonds will slither back down for a while in a fresh deflation scare. Exit strategies will go back into the deep freeze. Far from ending QE, the Fed will step up bond purchases. Bernanke will get religion again and ram down 10-year Treasury yields, quietly targeting 2.5pc. The funds will try to play the liquidity game yet again, piling into crude, gold, and Russian equities, but this time returns will be meagre. They will learn to respect secular deflation.
Weak sovereigns will buckle. The shocker will be Japan, our Weimar-in-waiting. This is the year when Tokyo finds it can no longer borrow at 1pc from a captive bond market, and when it must foot the bill for all those fiscal packages that seemed such a good idea at the time. Every auction of JGBs will be a news event as the public debt punches above 225pc of GDP. Finance Minister Hirohisa Fujii will become as familiar as a rock star.
Once the dam breaks, debt service costs will tear the budget to pieces. The Bank of Japan will pull the emergency lever on QE. The country will flip from deflation to incipient hyperinflation. The yen will fall out of bed, outdoing China’s yuan in the beggar-thy-neighbour race to the bottom. By then China too will be in a quandary. Wild credit growth can mask the weakness of its mercantilist export model for a while, but only at the price of an asset bubble. Beijing must hit the brakes this year, or store up serious trouble. It will make as big a hash of this as Western central banks did in 2007-2008.
The European Central Bank will stick to its Wagnerian course, standing aloof as ugly loan books set off wave two of Europe’s banking woes. The Bundesbank will veto proper QE until it is too late, deeming it an implicit German bail-out for Club Med.
More hedge funds will join the EMU divergence play, betting that the North-South split has gone beyond the point of no return for a currency union. This will enrage the Eurogroup. Brussels will dust down its paper exploring the legal basis for capital controls. Italy’s Giulio Tremonti will suggest using EU terror legislation against “speculators”.
Wage cuts will prove a self-defeating policy for Club Med, trapping them in textbook debt-deflation. The victims will start to notice this. Articles will appear in the Greek, Spanish, and Portuguese press airing doubts about EMU. Eurosceptic professors will be ungagged. Heresy will spread into mainstream parties.
Greece’s Prime Minister Papandréou will balk at EMU immolation . The Hellenic Socialists will call Europe’s bluff, extracting loans that gain time but solve nothing. Berlin will climb down and pay, but only once: thereafter, Zum Teufel.
In the end, the Euro’s fate will be decided by strikes, street protest, and car bombs as the primacy of politics returns. I doubt that 2010 will see the denouement, but the mood music will be bad enough to knock the euro off its stilts.
The dollar rally will gather pace. America’s economy – though sick – will shine within the even sicker OECD club. The British will need the shock of a gilts crisis to shatter their complacency. In time, the Dunkirk spirit will rise again. Mervyn King’s pre-emptive QE and timely devaluation will bear fruit this year, sparing us the worst.
By mid to late 2010, we will have lanced the biggest boils of the global system. Only then, amid fear and investor revulsion, will we touch bottom. That will be the buying opportunity of our lives.
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Chuck Madere
650-366-5307
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Madere’s Way: 545 vs. 300,000,000 By Charlie Reese
Posted by Chuck Madere in Madere's Way on February 7th, 2010
545 vs. 300,000,000
EVERY CITIZEN NEEDS TO READ THIS AND THINK ABOUT WHAT THIS JOURNALIST HAS SCRIPTED IN THIS MESSAGE. READ IT AND THEN REALLY THINK ABOUT OUR CURRENT POLITICAL DEBACLE.
Charley Reese has been a journalist for 49 years.
545 PEOPLE
By Charlie Reese
Politicians are the only people in the world who create problems and then campaign against them.
Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?
Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?
You and I don’t propose a federal budget. The president does.
You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does.
You and I don’t write the tax code, Congress does.
You and I don’t set fiscal policy, Congress does.
You and I don’t control monetary policy, the Federal Reserve Bank does.
One hundred senators, 435 congressmen, one president, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.
I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.
I excluded all the special interests and lobbyists for a sound reason.. They have no legal authority. They have no ability to coerce a senator, a congressman, or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator’s responsibility to determine how he votes.
Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.
What separates a politician from a normal human being is an excessive amount of gall.. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits.. The president can only propose a budget. He cannot force the Congress to accept it.
The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House? Nancy Pelosi. She is the leader of the majority party. She and fellow House members, not the president, can approve any budget they want. If the president vetoes it, they can pass it over his veto if they agree to.
It seems inconceivable to me that a nation of 300 million cannot replace 545 people who stand convicted — by present facts — of incompetence and irresponsibility. I can’t think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.
If the tax code is unfair, it’s because they want it unfair.
If the budget is in the red, it’s because they want it in the red ..
If the Army &Marines are in IRAQ , it’s because they want them in IRAQ
If they do not receive social security but are on an elite retirement plan not available to the people, it’s because they want it that way.
There are no insoluble government problems..
Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power. Above all, do not let them con you into the belief that there exists disembodied mystical forces like “the economy,” “inflation,” or “politics” that prevent them from doing what they take an oath to do.
Those 545 people, and they alone, are responsible.
They, and they alone, have the power.
They, and they alone, should be held accountable by the people who are their bosses.
Provided the voters have the gumption to manage their own employees.
We should vote all of them out of office and clean up their mess!
Charlie Reese is a former columnist of the Orlando Sentinel Newspaper.
What you do with this article now that you have read it……… Is up to you.
This might be funny if it weren’t so darned true.
Be sure to read all the way to the end:
Tax his land,
Tax his bed,
Tax the table
At which he’s fed.
Tax his tractor,
Tax his mule,
Teach him taxes
Are the rule.
Tax his work,
Tax his pay,
He works for peanuts
Anyway!
Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.
Tax his ties,
Tax his shirt,
Tax his work,
Tax his dirt.
Tax his tobacco,
Tax his drink,
Tax him if he
Tries to think.
Tax his cigars,
Tax his beers,
If he cries
Tax his tears.
Tax his car,
Tax his gas,
Find other ways
To tax his ass.
Tax all he has
Then let him know
That you won’t be done
Till he has no dough.
When he screams and hollers;
Then tax him some more,
Tax him till
He’s good and sore.
Then tax his coffin,
Tax his grave,
Tax the sod in
Which he’s laid.
Put these words
Upon his tomb,
Taxes drove me
to my doom…’
When he’s gone,
Do not relax,
It’s time to apply
The inheritance tax.
Accounts Receivable Tax
Building Permit Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Excise Taxes
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax (currently 44.75 cents per gallon)
Gross Receipts Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Personal Property Tax
Property Tax
Real Estate Tax
Service Charge T ax
Social Security Tax
Road Usage Tax
Sales Tax
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
STILL THINK THIS IS FUNNY?
Not one of these taxes existed 100 years ago, and our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.
What in the hell happened? Can you spell ‘politicians?’
And I still have to ‘press 1′ for English!?
545 PEOPLE
By Charlie Reese
Politicians are the only people in the world who create problems and then campaign against them.
What separates a politician from a normal human being is an excessive amount of gall.. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits.. The president can only propose a budget. He cannot force the Congress to accept it.
Be sure to read all the way to the end:
Tax his land,
Tax his bed,
Tax the table
At which he’s fed.
Tax his tractor,
Tax his mule,
Teach him taxes
Are the rule.
Tax his work,
Tax his pay,
He works for peanuts
Anyway!
Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.
Tax his ties,
Tax his shirt,
Tax his work,
Tax his dirt.
Tax his tobacco,
Tax his drink,
Tax him if he
Tries to think.
Tax his cigars,
Tax his beers,
If he cries
Tax his tears.
Tax his car,
Tax his gas,
Find other ways
To tax his ass.
Tax all he has
Then let him know
That you won’t be done
Till he has no dough.
When he screams and hollers;
Then tax him some more,
Tax him till
He’s good and sore.
Then tax his coffin,
Tax his grave,
Tax the sod in
Which he’s laid.
Put these words
Upon his tomb,
Taxes drove me
to my doom…’
When he’s gone,
Do not relax,
It’s time to apply
The inheritance tax.
Accounts Receivable Tax
Building Permit Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Excise Taxes
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax (currently 44.75 cents per gallon)
Gross Receipts Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Personal Property Tax
Property Tax
Real Estate Tax
Service Charge T ax
Social Security Tax
Road Usage Tax
Sales Tax
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
STILL THINK THIS IS FUNNY?
Not one of these taxes existed 100 years ago, and our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.
What in the hell happened? Can you spell ‘politicians?’
And I still have to ‘press 1′ for English!?
Chuck Madere
Madere’s Way: End the FED
Posted by Chuck Madere in Madere's Way on January 26th, 2010
Image via Wikipedia
End the Fed The Federal Reserve System, brought to you by Chuck Madere. The Fed, is the most important financial institution in the nation. Yet few Americans understand the Fed’s real purpose for existence and the dangers it presents to our nation’s financial well-being. However, Congressman Ron Paul’s book End the Fed, a New York Times bestseller, is changing that.
Simply, the Fed is a central bank, which has the legal authority to “create money out of thin air.” As Congressman Paul notes, as have other critics of the Fed have noted, it is an inflation machine. Rising prices across the board are not—and have never been—the fault of OPEC, unions or greedy corporations. Inflation is a monetary phenomenon that lies primarily at the door of the Fed. Fractional reserve banking deserves its share of the blame for inflation, but fractional reserve banking is exacerbated by the very existence of the Fed.
First elected to Congress in 1976, Ron Paul became a thorn in the side of the Fed, annually introducing a bill to dismantle the Fed. In no year could the Congressman find even one cosponsor to his bill. The Fed is held with such esteem by members of Congress that no one will stand alongside Dr. Paul on this issue. He was a voice crying in the wilderness, and I don’t doubt but that many members of Congress ridiculed him for his position on the Fed. Now, Ron Paul may be David, about to slay Goliath.
When the Fed created literally trillions of dollars to bailout large financial institutions and Ben Bernanke, Fed Head, had the audacity to tell Congress that he was not going to reveal who got the money much less how much they got, there was an uproar across the country. For perhaps the first time ever, the Fed was the focal point of public criticism, and Ron Paul called for a real audit of the Fed with HR 1207.
So intense have been the attacks on the Fed that for the first time it hired a lobbyist to defend its position on Capitol Hill. Paul’s Audit the Fed bill has 55 cosponsors and passed out of the House Financial Services Committee by a vote of 43 – 26. The Senate companion bill, S 604, has 31 cosponsors. Suddenly, Congressmen and Senators climbed on board the Ron Paul wagon. Undoubtedly, cosponsors climbed aboard not because they suddenly saw the evils of the Fed but because they saw the handwriting on the wall.
For nearly a hundred years, the Fed pretty much successfully concealed that it was the beast that its critics had said it was. To this day, most Americans do not know that the Fed, with its loose money policies of the 1920s, was the cause of the Great Depression of the 1930s.
In the 1970s, when prices rose at double digits rates, only Austrian economists correctly saw the Fed as responsible. The media, which by then had become fairly much the Fed’s lapdogs, blamed the “oil shock.”
Other times, rising price levels were attributed to “cost-push inflation,” a spurious theory that blamed businesses. When the CPI and GPI rose “only” 2%-3%, Americans were told “a little inflation is good.” Now, though, Ron Paul has told the truth.
The Fed is not a beneficent organization established for the good of mankind but exists solely for the benefit of big banking. End the Fed is Ron Paul’s assessment of an institution whose machinations he has sought to expose since before becoming a member of Congress. He relates how he came to realize the immorality of the Fed and the inflation it creates. And, he tells of his conversations with Fed Heads Greenspan and Bernanke when they appeared before House committees.
Paul pulls no punches. He lays the blame for the financial crisis of 2008 and the housing crisis squarely at the feet of Alan Greenspan. “History will show that Greenspan, during his years as Fed chairman (1987-2006), planted all the seeds of the financial calamity that erupted in 2007 and 2008.”
Further, Paul declares Obama’s “solution” to the problem not a solution at all. “. . . the inflation and debt accumulation of the Obama years will not inflate our way out of it. This depression will likely last and last. (Note that Paul calls our present economic woes a depression, not a recession.) If the depression lasts a decade or more, its length cannot be blamed solely on Greenspan. That blame will be placed on the current Federal Reserve Board, Congress, the President, the Treasury, but above all on Keynesian economic policy, the same philosophy that gave us the Great Depression of the 1930s.
” Many persons familiar with Ron Paul’s assessments of our problems are quick to point out that he is a doctor, “not an economist.” To that, I would remind them that Ron Paul has studied economics his entire adult life. Further, he has hobnobbed with some of the foremost economic thinkers of the Austrian economic school, such greats as Murray Rothbard, Hans Sennholz, F. A. Hayek and the master himself, Ludwig von Mises.
Additionally, Ron Paul has authored at least ten books on economics and political thinking. The Revolution, a Manifesto, like End the Fed, became a New York Times bestseller. With Lewis Lehrman, Paul coauthored The Case for Gold, which was a minority report to the 1981 U.S. Gold Commission, a Ronald Reagan initiative to study the role that gold should play in our monetary system. (The commission was stacked with anti-gold members and the minority report was one of only two benefits to come from the commission’s work. The American Eagle bullion coin program was the other.)
Ron Paul’s grasp of economics and understanding of the political process make him eminently qualified to write about economics and to make economic forecasts. Sadly, Paul is not optimistic about the immediate outlook for our economy.
End the Fed is only 210 pages, divided into fifteen chapters. Although Paul’s explanation why this depression likely will “last and last” is scary, his Chapter 4, Central Banks and War, is a shocker. Simply put, central banks facilitate war and give politicians fewer reasons to seek political solutions to differences with other nations. “It is no coincidence that the century of total war coincided with the century of central banking.” Before the days of central banks (European as well as our Fed), wars resulted in higher taxes and shortages as resources were diverted from the domestic economy to the war effort.
When politicians have to tell the people that the wars they are about to embark upon will raise taxes and create shortages, political solutions become viable alternatives. When the costs of the wars can be hidden through the creation of new money via central banks, political solutions are less likely. Sadly, many investment banking houses actually agitate for war as they stand to make billions of dollars issuing and trading in the bonds and securities that are sold as a nation gears for war.
Ron Paul’s End the Fed is must reading for anyone seeking to survive today’s financial turmoil. Understanding the problem is the first step toward solving it.
Thank You All For Reading
Chuck Madere
Self Improvement from SelfGrowth.com- – SelfGrowth.com is the most complete guide to information about Self Improvement on the Internet.
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